The Amazon Effect: What Is It and Why Do I Care?

Depending on your perspective, Amazon could be anything from an amorphous entity that mindlessly devours everything in its path, to a guiding light that personifies the peak of operational efficiency. Either way, there’s no denying Amazon has redefined modern commerce over the last two decades and, short of the unforeseen, won’t be slowing anytime soon.

A phenomenon known as the Amazon Effect has taken root and impacted, influenced, and irrevocably changed everything from marketing and merchandising, to the supply chain and retail technology. It’s Amazon’s revolutionary supply chain strategies, however, that have drastically, permanently changed the logistics landscape. Collectively, these advancements warrant attention from anyone doing business in today’s dynamic, crowded environment.

The Amazon Effect at a glance

The Amazon Effect loosely defines the impact the online space has had on more traditional business models. From a supply chain perspective, the Amazon Effect encapsulates the difficulties competing with companies that never close their doors, have countless regional distribution centers that operate around the clock, and endless fleets of trucks, ships, and planes at the ready to make distribution seamless, efficient and most importantly, fast.

Digital retailers have designed and implemented a vast network of vendors and partners that span the globe, reducing international commerce to a streamlined, interconnected web that relies on technology-driven, real-time communication to eliminate geographical barriers. In other words, short of teleportation and wormholes, the Amazon Effect is the epitome of efficiency given today’s most cutting-edge technology.

Competing with perfection

The thought of competing against such refined distribution capabilities is daunting. However, that shouldn’t imply that smaller companies or those with less capital and resources at their disposal face an impossible challenge. To effectively compete, companies must be willing and able to embrace solutions that infuse as much efficiency as possible. Outdated systems, whether in marketing, accounting, supply chain management, or any other component of operations, put companies at tremendous disadvantage to those that enjoy the benefits of automated processes and procedures.

Organizations that leverage the power of technology, particularly concerning the supply chain, can lower overhead and minimize the resources needed to accomplish more. Businesses that stay with outdated systems are needlessly impeding their ability to compete. In an environment where margins are perpetually slim, competition continually increases, and the room for error is virtually zero, technology can significantly level the playing field if implemented in an organized, well-planned manner.

Technological tools of the trade

Companies must use all tools available to them to counteract the Amazon Effect and maximize their productivity according to the resources available to them. Advanced analytics and optimization software, for instance, can streamline several facets of operations, including inventory ordering and forecasting. They also lend highly synced, connected lines of communication among employees, teams, and departments to minimize inefficient information silos.

Along the supply chain, IoT- connected equipment, throughout both production and distribution lines, can anticipate issues or insights before they become problematic or even worse, systemic and pervasive. When combined with enterprise planning software, companies can eliminate most sources of downtime to stay as competitive as possible.

The Amazon Effect will only increase in strength and magnitude as technology and capital continue to separate the haves from the have-nots. Embracing technology in an intelligent, impactful way is the best defense companies have in combating such powerful market forces. In this highly digitized world, companies that don’t adapt are at risk of quickly going extinct.

About Vanguard Software
Vanguard Software introduced its first product for decision support analysis in 1995. Today, companies across every major industry and more than 60 countries rely on Vanguard Software’s Integrated Business Planning (IBP), forecasting and advanced analytic cloud platform. Vanguard Software is based in Cary, North Carolina.

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